One year ago, yesterday, I shared the transcript of the CNBC interview with Herbjorn Hannson, CEO of Nordic American Tankers, an oil shipping company whose business fundamentals were profoundly good, particularly given the backdrop the market bottom, when things appeared most dire. This is but one company, and it captured my attention 12 months ago.
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On March 9, 2009, Nordic Shares closed around $23.43. Subsequently they closed at a high of 36.22, two months later on May 7, 2009. Currently, the shares are trading around 31.
NAT has no debt.
Here is the company's dividend record:
NAT has made the following dividend payments to its shareholders:
Amount per share (USD)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2010 0.25 2009 0.87 0.88 0.50 0.10 2008 0.50 1.18 1.60 1.61 2007 1.00 1.24 1.17 0.40 2006 1.88 1.58 1.07 1.32 2005 1.62 1.15 0.84 0.60 2004 1.15 1.70 0.88 1.11 2003 0.63 1.27 0.78 0.37 2002 0.36 0.34 0.33 0.32 2001 1.41 1.19 0.72 0.55 2000 0.34 0.45 0.67 1.10 1999 0.32 0.35 0.35 0.36 1998 0.40 0.41 0.32 0.30 1997 0.30 The table illustrates the dividend declared by quarter in which the dividend was paid and is based on the earnings of the previous quarter.
Here is Hannson's March 8, 2010 letter to shareholders.
Dear Shareholder,
As Chairman and CEO I strive to keep all our shareholders well informed about key aspects of the development of our Company. It is therefore now time for me to send you another letter.
Since my letter of September 29, 2009 to you, the Company has acquired two more suezmax vessels, of which one was delivered to us on November 17, 2009 and the other was delivered to us on March 2, 2010. We paid $51.5 million for each of these 2002 built suezmax tankers. Including the two newbuildings expected to be delivered to us later this year, the fleet of our Company consists of 18 suezmax vessels. The acquisitions are accretive and the dividend potential of the Company has increased.
Accretive growth is a key element in our strategy. Over time the fleet must grow faster than the share count in order to create value for shareholders. In January 2010 we priced a follow-on offering from which the proceeds to the Company were $137 million before cash offering costs. The Company currently has the resources to acquire 4 more vessels without tapping the equity market. An increase of the fleet from 18 to 22 vessels would represent a 22% increase of our fleet whereas the share count was increased by about 10% in connection with the follow-on offering. This is an example of accretion while recognizing that net debt is expected to be slightly higher after such prospective acquisitions.
Having a fleet consisting solely of suezmax vessels, we experience cost benefits and in today's environment we also pursue possibilities of further reductions in our costs. The Company also has low general and administrative costs which together with our low debt contribute to a very low cash breakeven.
So far into the first quarter of 2010, at the time of this writing, we observe a spot suezmax tanker market which on average is well above the level of the fourth quarter of 2009. Based on the market so far in 2010 we therefore expect the dividend of the Company for the first quarter of 2010 to be substantially higher than the dividend for the fourth quarter of 2009, which was $0.25 per share.
Our primary objective is to maximize total return to our shareholders, including maximizing our quarterly cash dividend. Over time we have in the past produced a very competitive total return for our shareholders and we believe that we are in an excellent position to achieve such results also going forward.
With our proven model and strong balance sheet we aim to be in a position to reap the benefits in the markets as they develop, be they soft or strong from time to time.
I would like to finalize my letter to you by stressing a key dimension in our model: the alignment of interests between our shareholders and our management. If our shareholders do well, so do management and vice versa. We do not believe in special, supermajority shares, for our management. In our Company, all shares have one vote, plain and simple.
As you understand, I am optimistic about the future of our Company.
All the best!
Sincerely,
Herbjørn Hansson
Chairman & CEO
This is by no means a recommendation, I'm not promoting it, nor is not intended to be. What I believe is that this company and others like it are very attractive in a world where credit is difficult to come by.
Disclosure: No positions
